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for a property, we can check directly whether a multifamily property which fell under the <br />rent control regulations in 1994 is more likely to have converted to condominium housing <br />or a tenancy in common, relative to a multifamily property which did become subject to <br />rent control. In Figure 12c, we show that treated buildings are 8 percentage points likely to <br />convert to condo or TIC in response to the rent control law. This represents a significant <br />loss in the supply of rent controlled housing. <br />As a final test of whether landlords actively respond to the imposition of rent control, <br />we examine whether the landlords of rent -controlled properties disproportionately take out <br />addition/alteration (i.e. renovation) permits. We find this to strongly be the case, as shown <br />in Figure 12d. Of course, conversions of multifamily housing to condos undoubtedly require <br />significant alteration to the structural properties of the building and thus would require such <br />a permit to be taken out. These results are thus consistent with our results regarding condo <br />conversion. <br />Moreover, under the San Francisco rent control regulations, capital improvements can <br />be passed onto tenants in the form of higher rents. If the existing tenants are unable to <br />afford the higher rents, capital improvements could be one way to get new tenants in the <br />property and reset to market rents. It is important to note that this evidence contradicts the <br />traditional view of rent control, that landlords will be disincentivized from investing in the <br />property. On the contrary, we find that landlords appear to make significant investments in <br />their properties. <br />Taken together, we see rent controlled increased property investment, demolition and <br />reconstruction of new buildings, conversion to owner occupied housing and a decline of the <br />number of renters per building. All of these responses lead to a housing stock which caters <br />to higher income individuals. Rent control has actually fueled the gentrification of San <br />Francisco, the exact opposite of the policy's intended goal. <br />18 <br />